MINNEAPOLIS - Minnesota U.S. Senate candidate Al Franken has agreed to pay a $25,000 penalty for not carrying workers' compensation insurance for former employees.

The Minneapolis Star Tribune reported Thursday that Franken is disputing the fine -- levied by the state of New York for not having coverage for about three years on employees in his entertainment production office in New York -- but decided to pay the judgment anyway.

"We decided to make the payment and the accountant can deal with the files," said Jess McIntosh, a spokeswoman for the Franken campaign.

The newspaper reported that if the state Workers' Compensation Board was in error, Alan Franken Inc. would receive a rebate on the penalty.

By paying the fine now, Franken was not surrendering his rights, the newspaper said.

Franken -- a former radio talk show host and writer-performer on "Saturday Night Live" -- is one of three Democrats belonging to the Minnesota Democratic-Farmer-Labor Party hoping to unseat Sen. Norm Coleman, R-Minn.